Have you ever come across the Form 8990 in an individual or business tax return and wondered if this impacts your cash flow analysis? This form can provide key information regarding the total interest expense paid by an individual or business; here’s what you should know. Section 163(j): Limitation on Business Interest Expense One of…
Are They Capital Contributions or Charitable Contributions? Have you ever looked at the Schedule K-1 from an S corporation and found values reported on Line 12 Other Deductions with corresponding letter codes, but no description of the actual deduction? An analyst recently called into the Bukers Hotline with a K-1 showing: This analyst is sharp…
Have you ever looked at a Schedule K-1 from a partnership and seen significant decreases in the profit, loss, and/or capital percentages? An analyst recently called into the Bukers Hotline to ask whether she needs to make an adjustment to her cash flow analysis for the decrease in her borrower’s ownership percentages. The answer depends…
An experienced banker called into the Bukers Hotline with a great question on wages and the Form W-2. Here was the situation: The banker’s question: Which wage figure do I include in my cash flow analysis? Should I use wages from line 1 of the Form 1040 of $210,000 or the Medicare wages of $228,000…
The Bukers Hotline received a call from a banker analyzing a Schedule D that included a long-term capital gain from excess distributions for about $10 million. Where do excess distributions come from? Is this cash flow for our prospective borrower? The Schedule D is by far one of the most challenging forms to analyze in a cash flow analysis…
We recently received a call to the Bukers Hotline from a banker who was analyzing her borrowers 2020 Form 1040. She noted the whitepaper detail for Line 2a Tax-Exempt Interest listed a partnership that the borrower was a partner in as the source for the tax-exempt interest income. Is it cash flow? It depends. The…
Many of our users have called the hotline asking if Box 14 (self-employment earnings) on the partnership Schedule K-1 should be included as cash flow to an individual. Since we receive this question often, we felt it was worth explaining in greater detail in our newsletter. At first glance, Box 14 (self-employment earnings) may seem…
The Tax Cuts and Jobs Act of 2017 changed the tax deductibility of unreimbursed employee business expenses for most individuals. Specifically, the deductibility of unreimbursed employee expenses on Form 2106 is now limited to Armed Forces reservists, qualified performing artists, and a few other groups of taxpayers. Assuming that lenders won’t often receive a qualifying…